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Suppose there are nine sellers and nine buyers

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1.Suppose there are nine sellers and nine buyers, each willing to buy or sell one unit of a good, with values ($60, $50, $45, $40, $35, $30, $25, $20, $15). Suppose there is a single market maker in this market. What is the optimal bid-ask spread?

a.$15 bid; $60 ask

b.$20 bid; $50 ask

c.$25 bid; $45 ask

d.$30 bid; $40 ask

2.Suppose there are nine sellers and nine buyers, each willing to buy or sell one unit of a good, with values ($60, $50, $45, $40, $35, $30, $25, $20, $15). Suppose there is competition among several market makers, and the spread has been forced down to $10. H0w many goods are traded?

a.Five

b.Four

c.Three

d.Two

Reference no: EM13309012

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